"This was at a time when the Indian rupee had depreciated severely. In March 2020, export growth had fallen due to last-minute invoicing by the exporters, which was soon followed by the lockdown," Rasquinha said.
The COVID-19 pandemic has caused “demand destruction” in the overseas markets and it is likely to continue for the next few quarters, eminent bankers said on Saturday. The disruption will last for six to eight months before business starts to bounce back, they said.
“There is a huge demand destruction in the overseas markets,” MD of Exim Bank David Rasquinha said at a webinar. He said in the years 2017, 2018 and 2019, Indian merchandise exports were robust, while exports of services were even stronger. “This was at a time when the Indian rupee had depreciated severely. In March 2020, export growth had fallen due to last-minute invoicing by the exporters, which was soon followed by the lockdown,” Rasquinha said.
India is a consumption-driven economy where 55 per cent of the spending is on essentials and the balance being discretionary, he said. On shifting base of industries from China, the senior official said, “Not everyone is leaving China. We have to offer good manufacturing facilities here to investors.” CMD of ECGC M Senthilnathan said in the first three months of the fiscal, the corporation had absorbed substantial losses and 40-50 per cent of the shipments were not dispatched.
“These disruptions will last for six to eight months amid a decrease in overseas demand. Exporters have to be given credit for longer period,” he said. Senthilnathan said ECGC is assuming more risk than before to restore the trade cycle, which has been impacted due to the coronavirus crisis. Major central banks across the world were taking unprecedented steps to bring back their economies in good shape, Deputy MD of SBI (IBG) C Venkat Nageswar added.